Hey there, future homeowners! If you’ve been on the house-hunting rollercoaster, you know the heartache of losing your dream home to a higher bidder. But what if I told you there’s a strategy that could work in your favor? Buckle up because we’re diving into the benefits of buying a home when rates are slightly higher, all while keeping an eye on the inevitable interest rate drop.
Interest Rates Will Drop This Year: So Why Buy Now?!
First, let’s talk about the elephant in the room—interest rates. We all love a good bargain, and historically, low interest rates have been the holy grail for some homebuyers in recent years. However, this coin has a flip side that not everyone considers, and it is very real: fierce competition. When rates are rock-bottom, every Tom, Dick, Harry, Mary, Marsha, and Sue is gonna be out there, armed with pre-approvals, and bidding wars become the norm.
Now, picture this: slightly higher interest rates than you’ve been used to. It’s not sky-high compared to the historical average. While it might sound counterintuitive, this scenario can be your golden ticket. Why? Because when rates inch up, the frenzy dies down. Sellers find themselves with fewer suitors, creating a buyer’s market where you can negotiate more comfortably. As a full-time realtor myself, I felt this immensely this past year. The buyers were going up against 1, maybe 2 other buyers for homes that had even been sitting on the market. This starkly contrasts my experience selling real estate in 2020-2021, when receiving upwards of 20 offers on one home was customary. My guess is when interest rates will drop this year. A total repeat.
Coming Out in the Wash
Those bidding wars I mentioned earlier? Well, they often lead to inflated home prices. When the competition is less cutthroat, you’re likelier to snag a home at a fair market value. Paying a bit more in interest can translate to savings on the overall cost of your home. It could even come out in a wash when comparing overpaying for the home or overpaying in interest.
Moreover, consider the long game. If you secure a home during a period of slightly higher rates, you might be in for a pleasant surprise when interest rates eventually drop. Picture this: as rates go down, the value of your home could go up. You not only avoided the competition, but you also set yourself up for potential equity growth. And remember that thing called refinancing? You should do it when interest rates go down.
Tardy to the Interest Rate Drop Party
In conclusion, playing the real estate game strategically can pay off in the long run. While everyone else is fixated on snagging a deal at the lowest possible rate, you can swoop in, avoid the frenzy, and potentially come out on top when interest rates drop. So, instead of being tardy to the party, missing out on your dream home, or continuing to be a bump on a log, consider NOW a golden opportunity to move into the housing market!
Written on the scene by David Clark, an Angeleno who has cultivated his passions for NELA to become a top producing agent with The Shelhamer Real Estate Group. David resides locally and draws inspiration from architecturally significant properties, local folklore, and his Epicurious and artistic lifestyle.
Reach out and connect with me in the comments. I’d love to hear about what’s in your neighborhood and the vibrant new businesses and movements that have caught your eye and grabbed your attention.
805.280.1425
